Complex copyright case sets precedent for future relationship property disputes

A recent landmark ruling in the Court of Appeal marks a significant development in how intellectual property and relationship property law intersect.  The Alalääkkölä v Palmer case raises critical questions regarding the classification and division of copyrights in artistic works created by one spouse during a marriage, under the Property (Relationships) Act 1976 (PRA).

Not only does the case highlight the complexities of intellectual property and relationship property law, it sets a precedent that may influence future disputes involving intellectual property in relationship break ups. 

Introduction to the Case

Sirpa Alalääkkölä, an artist, created numerous artworks during her 20-year marriage to Paul Palmer. Their dispute at the end of their relationship was not about the physical artworks but the copyrights in these works. 

In the Family Court of New Zealand, Judge Grace found that:

1. The copyrights were property for the purposes of the PRA.

2. The copyrights were severable from the work created. Although the work itself was relationship property, the copyrights derived from Ms Alalääkkölä’s skill and ownership and were classified as separate property under the PRA. 

On appeal to the High Court of New Zealand, Justice Isac found that:

1. The copyrights fell within the definition of property in section 2 of the PRA.

2. Judge Grace had erred in classifying the copyrights as Ms Alalääkkölä’s separate property. The copyrights were classified as relationship property under the PRA. 

The pivotal questions on appeal in the court were whether these copyrights are "property" under the PRA, how they should be classified (as relationship or separate property), and their appropriate treatment to ensure an equal division of relationship property.

Copyrights as "Property" under the PRA

The court unequivocally found that copyrights are "property" for the purposes of the PRA, aligning with the definition provided in section 2 of the PRA. This determination was grounded in the identification of copyright under the Copyright Act 1994, which explicitly recognises copyright as a property right.[1] 

Classification of Copyrights under the PRA

The court then tackled the more nuanced issue of whether these copyrights should be classified as relationship property or separate property. It was argued that the copyrights were intrinsic to Ms Alalääkkölä's personal skills and qualifications, which were acquired before the marriage. 

However, the court distinguished between Ms Alalääkkölä's personal artistic skills (which do not constitute property under the PRA) and the copyrights in the artworks created during the marriage. Consequently, the copyrights were deemed to be relationship property, as they were acquired during the marriage. 

Treatment of Copyrights under the PRA

The most contentious aspect of the case was how to treat these copyrights to ensure an equal division of relationship property. Ms Alalääkkölä sought to retain exclusive legal ownership, proposing a compensatory adjustment to Mr Palmer from other relationship property (primarily the sale proceeds of the family home). Mr Palmer, on the other hand, sought a share of the copyrights in the artworks that he retained. 

The Court sided with Ms Alalääkkölä, emphasising the unique and personal nature of copyright, particularly for artistic works. It recognised the potential for harm to Ms Alalääkkölä's artistic integrity and professional interests if copyrights were divided and Mr Palmer had free use of the copyrights in the artworks that he retained. The court considered Ms Alalääkkölä's moral right in the use of the copyrights and the possibility that Mr Palmer’s use of the copyrights would breach this moral right, leading to further litigation. Thus, it was determined that Ms Alalääkkölä should retain the legal ownership of the copyrights, with Mr Palmer receiving a compensatory adjustment. . 

Conclusion

The Alalääkkölä v Palmer decision is a landmark ruling that underscores the complexities at the intersection of intellectual property and relationship property law. It also highlights the need for careful consideration of the unique nature of copyrights, especially in artistic works, in the division of relationship property. 

This case sets a precedent that will likely influence future disputes involving intellectual property within the context of relationship breakdowns, stressing the balance between equitable division of property and the protection of individual creative rights.

If you require assistance with relationship property matters, contact Amanda Donovan on @email or 09 306 0620.